For better or worse, investors are living through Trump’s stock market. Here's why

President Donald Trump has been considered the ultimate stock market president, overseeing an expansion to numerous record highs while serving as a catalyst for major declines.

Within the first two months of Trump's second term, the S&P 500 experienced one of the fastest falls to correction territory since World War II, spurred primarily by uncertainty surrounding his tariff policies. Not even a month later, the index almost closed in bear market territory on the heels of the president's "liberation day" tariff announcement. A correction is defined as a fall of at least 10% but less than 20% from its recent high, while a bear market is a drop of at least 20% or more on a closing basis.

But the market has also recovered faster than the norm under Trump.

When it comes to S&P 500 pullbacks of 5% to 9.9% from its peak, the two that have occurred since early 2025 have reversed faster than the median of 34 days, according to CFRA Research. That's a better rate of recovery compared than under any other president dating back to Ronald Reagan in 1981.

"The bull market takes the stairs, whereas bear markets take the elevator," said Sam Stovall, CFRA Research's chief investment strategist. "What we're seeing in Trump 2.0 is lower volatility overall combined with a quicker-than-average recovery from sharp sell-offs."

The most recent recovery in Trump's second term — when the S&P 500 bounced back from a 9.1% decline in only 16 calendar days — was one of the speediest since World War II, tying for ninth fastest, CFRA found.

"It's the earnings growth that has caused investors to remain very optimistic," Stovall said.

A new era

FactSet data shows first-quarter S&P 500 earnings have grown by more than 20% year on year. That's near the strongest profit expansion since the fourth quarter of 2021.

That solid earnings backdrop — which backed up the strong enthusiasm around artificial intelligence on the Street — may have supported the market's most recent recovery. But the move higher was first sparked by hope that the war between the U.S. and Iran would be reaching an end in the near term.

Iran and the U.S. last month agreed to a ceasefire, easing worries that oil prices will stay elevated and put upward pressure on prices. However, that truce has become increasingly fragile, as Trump this week said the ceasefire was "on life support."

"News trumps charts," said Carson Group Chief Market Strategist Ryan Detrick. "We've been in a very headline-driven world, headline-driven market, and investors have just had to kind of strap on and get on the roller coaster and go along with it."

Detrick maintains that a global bull market for equities is still in place, and it might be on the younger side in its lifespan. From here, he thinks, investors would be best served buying the dip.

"I don't know we've ever had a market that's this fixated on the day-to-day news coming out of the White House," he said. "Under President Trump going forward, I think this volatility is just what we have to get used to."

That speaks to a generational shift at play on Wall Street. In recent years, investors have been conditioned to use sizeable market declines as buying opportunities, especially those who came of age in the wake of the global financial crisis.

"FOMO is a very real thing for an institutional investor," said Steve Sosnick, chief strategist at Interactive Brokers.

Sosnick found that those who sold on Trump's tariff announcement last year and were slow to buy back shares underperformed those who weren't. That has now led to "this general reluctance of institutions, broadly speaking, to sell too aggressively," he said.

"We may be putting a little too much behind us, or a little too much faith in when we get sort of happy talk out of the administration," the strategist told CNBC.

'Don't fight the White House'

Investors have been so fixated on announcements out of the White House that Trump has been the main driver of the market's best — and worst — five days since his return to office, Fundstrat data shows.

The S&P 500's best day since Trump became president again was April 9, 2025 — when it surged more than 9% after he paused his widespread tariffs. The benchmark's worst day took place on April 4, 2025, after China retaliated with levies of its own on U.S. goods.

Not in almost half a century has any U.S. president been responsible for this many best and worst market days during their time in office, per Fundstrat. If it weren't for the five best days driven by Trump in his second term, the S&P 500 would only be 1% higher since his taking office. That's as opposed to the index being up 23.5% from that inauguration date.

"No other president has had this level of control over the fortunes made in the stock market," Hardika Singh, economic strategist at Fundstrat Global Advisors, said in an interview.

"The only strategy investors need to follow is don't fight the White House, because you're going to lose and you're not going to make any money," she said. "Throw out your old investing playbook."

Trump's communication style, at times rapid-firing posts on social media, have added fuel to the market's swings — and have changed how future presidents will have to convey messages to Wall Street, said Matt Gertken, chief geopolitical strategist at BCA Research.

"Social media is kind of the name of the game now," Gertken said. "Even a president who comes in and tries to implement a very steady and routine mode of communication may end up having to adopt some of Trump's standards later because of the situation he finds himself in."

Regardless of whether future presidents do actually take on a Trumpian style of communication, the market is going to remain volatile. For Gertken, if future presidents are more silent on social media, the market will "gyrate and vacillate out of speculation." But if they speak frequently like Trump, the market will fluctuate based on their latest statements.

"There's no going back," he said.